Sometimes your needs will be met more efficiently and with less risk employing ETFs for smaller accounts. ETF Portfolio Management has the advantage of customization, low turnover and diversification. A more detailed look at ETFs can be found on our Investment Companies page.
SCM’s selects eight blue chip ETFs for its ETF Model. We combine them into several road maps which match your return needs and risk needs to market forecasts. The ETFs in the SCM Model are grouped to manage risk by using several approaches, firm sizes and foreign exposure.
Based on your needs in terms of risk and return, the long-term asset targets are fixed. The holdings are fixed models of ETFs. However, these fund mixes may change when market factors start to shift.
When the holding’s actual mix move away from targets through market action, when your needs change or target sets shifts, trades are made to fix the mix.
ETF Fund Picks
The SCM’ Model ETFs are index based where index members are weighted either by firm size or other measures such as sales or book value.
SCM’s ETF picks are index funds, aimed to give the look of a stock or bond index, minus fees. These funds are run by people who get alpha or market-beating returns by using one off weighting mixes such as sales or book value to set the holdings rather than weighting by traditional but biased market capitalization. The cost of an ETF includes index provider licensing and fund administrative fees rolled into an expense ratio. Finally, there are no one-time front/back loads or ongoing marketing fees.
ETFs are considered a form of mutual fund under the Investment Company Act of 1940, which means they must be diversified. They do not have any over-concentration in one company or sector. Risk control traits keep SCM’s focus on asset mix while making sure the portfolios aren’t overly exposed to individual stocks, bonds, industrial sectors, countries or global regions.
Traditional mutual funds distribute any capital gains to their investors at the end of the year, whether there were taxable event transactions in the portfolio or not. Finally, It’s possible to buy a new fund in December and receive a taxable distribution a week later. ETFs have the tax efficiency of index funds through low turnover.